Cost issue simmering in Medicare's Dendreon review

WASHINGTON, (Reuters) - When a U.S. Medicare advisory panel reviews Dendreon Corp's new prostate cancer therapy on Wednesday, there will be one issue on everyone's mind that advisers cannot consider: its $93,000 price tag.

The novel vaccine, called Provenge, was approved for the U.S. market in April to treat men with advanced prostate cancer after company data showed it help men live another 4.1 months.

Now it faces another test by the U.S. Centers for Medicare and Medicaid Services (CMS), which is deciding whether to pay for the treatment for the millions of older men in the nation's Medicare insurance program.

Its ruling is critical not only for patients seeking the therapy, but also the biotech's sales.

Nationwide Medicare coverage could ensure the product's success, but any limitations or a denial could sharply dent sales. Private insurers are also likely to follow suit.

Although CMS and its advisers can only legally consider whether use of the vaccine is "reasonable and necessary," cost is lurking in the background.

"This is overwhelmingly used in the Medicare population, and that is a red flag," said David Blaszczak, a health policy analyst for Potomac Research Group who follows CMS. "It's a high-volume, high-cost procedure."

"It won't come up at the meeting, but I think cost is at play," Blaszczak told Reuters.

On Wednesday, CMS's outside advisers will discuss use of the biotech's vaccine and offer recommendations. Agency officials are due to make an early decision in March before finalizing their payment rule by the end of June.

Cells from a patient's tumor are removed and incorporated into a vaccine, then injected back into the patient. Unlike traditional vaccines that prevent disease, Provenge stimulates the body's immune system to attack malignant cells.

Dendron officials have declined to talk ahead of the meeting.

It's not clear exactly how much Medicare could end up spending on Provenge, although analysts so far expect overall peak sales of nearly $2.3 billion in 2016, according to Thomson Reuters data.

The government's National Cancer Institute estimates nearly 218,000 men will be diagnosed with the disease this year. But not all cases are advanced enough to qualify for Provenge and not all of patients would necessarily be enrolled in Medicare.

While Medicare's potential spending on one treatment is not likely to bankrupt the popular insurance program, the debate over costs comes amid larger worries about its overall fiscal health and the nation's swelling deficit.

Last week, a U.S. deficit commission called for sweeping changes to the program in an effort to reduce costs.

"Cost may play a side conversation role, but you're not going to see cost creep into any sort of coverage decision," Thornton told Reuters.

Cancer therapy in general can cost tens of thousands of dollars, especially when side effects arise. But unlike other cancer drugs, which can see costs stretched over months or years, Provenge's three doses are given just two weeks apart.

Patient groups in particular want cost off the table.

"We think that's a debate that's not going to concern CMS," said Kerry Donahue, a lawyer for CareToLive, a group representing doctors, patients and Dendreon investors that pushed for Provenge's FDA approval. "The agency should not get involved in looking at the cost."

In calling for the meeting, CMS said it will focus on the current evidence about the benefits and harms of Provenge when used as approved for advanced prostate cancer as well as wider, "off-label" use.

Many analysts expect the agency to ultimately cover the vaccine for FDA-approved use, although Medicare could also seek additional data as a condition of its payment.